Competitiveness of Short Sea Shipping

Analysis of the competitiveness of European Short
Sea Shipping compared to road and rail transport

In this project TML and NECL analysed the market position of Short
Sea Shipping (SSS) and assessed both quantitatively and qualitatively
the impact on its competitiveness for 5 future policy scenarios. The
project had three main objectives:

For a selected group of policies targeting improved
environmental performance for Short Sea Shipping (SSS) in Europe,
investigate the magnitude of the impact of these policies on:

Transport costs

Transport volumes

Emissions

Estimate the importance of non-cost drivers on the modal choice
of shippers, and how they may change the results of calculations for
the first objective.

Investigate potential effects these policies may have on trade
flows between Europe and other continents.

As a first step, costs structures for all relevant modes were
developed. To assess the competitiveness of European short-sea freight
shipping compared to road and rail alternatives for 252
origin-destination freight routes, a model was developed. This model –
using a CES-production function - allows for the choice between a route
using mostly SSS (and partly road) or a route using mostly road (but
which can also include rail or SSS) for each O/D pair. This choice
mainly depends on the evolution in costs.

The results show that the effect on costs and volumes mainly depend
on the ship type, the distance and the commodity transported. Overall,
the effect on modal shares remains rather limited; varying between a
decrease for SSS of on average 1 to 7%; while there is a clear effect on
total emissions for all pollutants. The qualitative analysis focused on
possible responses ship operators may take such as speed reductions or
lower profit margins.
This was complemented with an analysis to assess the effect of a sulphur
regulation of 0.1% in the ECAs on intercontinental trade. Given the
marginal cost increase of intercontinental maritime transport and the
marginal share of maritime transport cost in end user prices, the new
legislation would cause negligible cost increase to end user prices